Investing.com — Bank of America upgraded Prologis to Buy from Neutral with a price target of $130, saying leasing activity is improving as companies speed up decision-making on warehouse space.
The brokerage said the pace of converting lease proposals into signed deals picked up in the third quarter compared with the second, a sign that uncertainty weighing on tenants is starting to ease.
“That conversion of new lease proposals into signed leases during 3Q is occurring at better rates than during 2Q is a positive,” BofA said.
Prologis, the world’s largest warehouse owner, reported a record leasing pipeline of 130 million square feet at its second-quarter earnings, even as U.S. net absorption turned negative.
BofA said much of the slowdown came from tenants touring space but delaying commitments, and with decisions now being made, Prologis is in a position to capture more demand.
Supply is easing as well, with new warehouse deliveries in 2026 expected to be down at least 20% from 2025 and 65% below the 2023 peak, meaning less demand is needed to keep occupancy and rents firm.
Prologis has other growth drivers, including market rent increases, data center conversions and development. While BofA noted challenges such as refinancing headwinds and pockets of weakness in Southern California, it said much of the downside risk is already priced in.
Shares of Prologis trade at about 24 times forward AFFO, below their historical average of 26 times, with a dividend yield above 3.5%.
BofA said potential interest rate cuts could bring more investors back to blue-chip real estate stocks like Prologis.
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